There’s been a flurry of recent reporting (driven largely by a Business Insider feature) around what role – if any – New Jersey Governor Chris Christie is playing in the delay of PokerStars‘ entry into NJ’s regulated online gambling market.

Below is a collection of questions and answers surrounding this complex and ambiguous situation. Contact us with additions, corrections or other feedback.

The story so far

A target date of fall 2014 was supported by commentary from regulators, company sources and other stakeholders.

That expectation gradually gave way to uncertainty as PokerStars’ status remained unresolved for weeks, then months.

And then that uncertainty began to demand an explanation.

Several emerged, but the most popular and persistent theme was to blame the delay on Gov. Christie.

In one flavor of the speculation, Christie is said to be delaying Stars’ entry as a way of extracting a greater economic commitment from Amaya. In another, Christie is waiting to see how RAWA pans out before greenlighting Stars.

Adelson and Christie have a history of direct dialogue on the issue of regulated online gambling.

… and why it doesn’t

The engine of the narrative – State Sen. Ray Lesniak – is a savvy, Democratic pol who has a massive ax to grind with Christie.

Short of comments from Lesniak and a union leader in New Jersey, there is nothing to directly indicate that Christie has intervened, or even any description – on the record or off – of how such intervention might have manifested. And even Lesniak’s comments toe the line between implication and outright accusation.

The optics of Christie intervening for purely political aims would be uniquely terrible in the wake of Bridgegate.

Such an intervention would also inflict massive damage to the credibility and reputation of New Jersey’s regulatory structure for casino gambling.

The Christie / Adelson narrative is a highly appealing one to a variety of outlets. It touches tech, big money, gambling, presidential politics and two unique personalities. And it’s nearly impossible to prove or disprove. That’s a cocktail that can lead to speculation being treated more akin to fact than it might be under typical circumstances.

It also breeds ubiquitous coverage that inevitably converges on a distillation of the most salacious aspects of the story. And that (skewed) ubiquity can easily be conflated with fact.

Who is driving the accusation that Christie is delaying PokerStars?

The primary public force driving the Christie / Adelson narrative (and the underlying narrative of Christie being directly to blame for the delay) is New Jersey State Senator Ray Lesniak (D – 20).

Sen. Lesniak was one of the chief architects and supporters of New Jersey’s regulation of online gambling. He has also been an outspoken supporter of PokerStars (both before and after their acquisition by Amaya).

Lesniak first publicly connected Christie, Adelson and the PokerStars delay on Twitter in November 2014:

Lesniak gradually became more forceful and specific regarding the connection, culminating in a series of quotes to Business Insider where he said “it’s pretty well known” that Christie inserted himself into the licensing process for PokerStars and “put a stop to it.”

Also featured prominently in the Business Insider piece: Bob McDevitt, president of Unite Here Local 54, the union for Atlantic City casino workers, who said that it was his “understanding” that “the attorney general’s office and the governor” were responsible for the delays.

I am unaware of anyone else (in a position to know) who has gone on record regarding Christie’s alleged involvement.

What is Christie’s response?

Christie spokesman Kevin Roberts offered the following comment on the issue to Business Insider: “It’s a totally nonsensical argument, as Governor Christie signed the law to legalize online gaming in New Jersey. The DGE licensing review is an independent, technical process, the length of which varies case by case.”

What is Christie’s connection to Sheldon Adelson?

As a potential presidential candidate, Christie is obviously generally subject to the force of financial gravity exerted by Adelson upon the national GOP.

Why does Sheldon Adelson care if PokerStars gets in NJ?

The thinking is that Adelson opposes PokerStars because PokerStars would kickstart the nascent online gambling industry in New Jersey, especially the poker segment, which has lagged behind online casino gaming in terms of revenue and growth.

A stronger regulated online gambling industry in New Jersey, the logic goes, would complicate Adelson’s attempts to engineer a federal ban on the activity.

Adelson has never made a comment on the situation specifically, but did make disparaging references to PokerStars during a G2E keynote speech in September 2014.

Adelson said PokerStars had been “picked up as criminals” and were now “trying to get back into New Jersey.”

“He said he was about to be overridden anyway,” Adelson told Bloomberg. “He said it was about to be overridden or over-vetoed or whatever you call it.”

It’s also worth noting that Christie signed New Jersey’s bill into law in February 2013 – several months before Adelson penned his now-infamous anti-online gambling op-ed in Forbes and over half a year before Adelson formally launched his lobbying campaign against regulated online gambling.

When asked at a California Assembly hearing in April 2014 why Las Vegas Sands didn’t oppose online gambling regulation in New Jersey, Andy Abboud, Senior Vice President of Government Relations and Community Development for LVS, said it was because his company’s position had “evolved” since then.

Does Christie have the final say on PokerStars’ license?

No.

Licensing for New Jersey’s gambling industry in general, and for online gambling specifically, falls under the purview of the Division of Gaming Enforcement.

Why would Christie delay, and not quash, PokerStars’ application?

Remember that all of the following assumes Christie is in fact intervening, which has not been proven to be the case.

With that said, Christie might hypothetically prefer a delay to an outright denial for a number of reasons, including:

He lacks the explicit power to quash it directly.

That sort of direct political intervention would cause serious and lasting harm to the reputation of New Jersey’s gambling regulatory system, one that is generally regarded as a gold standard globally.

Delaying allows Christie to play both sides, showing Adelson a willingness to be cooperative while still ensuring New Jersey doesn’t lose out on the economic benefits of PokerStars.

In some scenarios, Christie is thought to be bargaining with Amaya for more local jobs, greater investment, and so on. In these scenarios, the delay is a tactic and approval is always the ultimate outcome.

In some scenarios, Christie is thought to be delaying PokerStars to see how RAWA plays out. In these scenarios, a delay serves the purpose of allowing Christie to better gauge the chances of a federal ban before he risks political capital by signing off on PokerStars, as a ban after approval would result in all the blowback with none of the benefit.

How could PokerStars’ entry into NJ impact Christie politically?

The political calculus for Christie is complicated.

On the one hand, opposing PokerStars could curry favor with Adelson and allow Christie to sidestep the potentially tricky optics of effectively blessing a company with a controversial past.

On the other, opposing PokerStars opens Christie up to accusations of doing Adelson’s bidding at the expense of hundreds of jobs and millions in economic impact for the mightily-struggling Atlantic City.

When did PokerStars apply for their New Jersey license?

That’s actually a somewhat trickier question that it might seem, as PokerStars has gone through a few phases of application in New Jersey.

PokerStars first started the general process in early 2013 as part of its failed attempt to purchase The Atlantic Club. The process continued after the sale fell apart and PokerStars announced a partnership with Resorts AC in July 2013. That iteration of their application was formally paused by New Jersey regulators in December 2013.

But it’s the second iteration of their application under the ownership of Amaya that has generated all of the recent interest.

That application was filed on October 4, 2014. You’ll note that the application is for a “transactional waiver” – those are effectively probationary licenses that allow an individual or entity to being working in the market while a full investigation is conducted by the DGE.

The transactional waiver path pursued by Amaya / PokerStars and Resorts is the same licensing path followed by all of the current operators in New Jersey’s regulated market.

A primer on NJ online gambling licensing

The ability to offer online gambling is limited to the state’s land-based casinos. Only those casinos can apply for Internet Gaming Permits(IGP), which are the top level of licensing in New Jersey’s regulated online gambling market.

IGP holders can then partner with other brands and platform providers, who must receive an Ancillary Casino Service Industry Enterprise (ACSIE) license.

An online gambling site cannot operate in New Jersey’s market without an IGP holder. To put it another way: without a land-based casino, there’s no online casino.

What it effectively amounts to is a system where companies like Party Poker partner with land-based casinos like the Borgata, with Party supplying the underlying technology and both companies offering consumer-facing brands.

How are PokerStars, Rational and Olford Group related?

The simplest way to explain it: Rational is the parent company of PokerStars. The Olford Group are the former owners of Rational.

Olford sold Rational lock, stock and barrel to Amaya, and Rational continues to exist as a the corporate entity overseeing PokerStars, Full Tilt and the related brands.

There’s quite a bit of oversimplification in the above, but it’s good enough for government work.

Are New Jersey regulators still actively reviewing PokerStars’ application?

Yes.

DGE spokesperson Kerry Langan confirmed that the review is “ongoing.”

And sources tell OPR that the DGE has been to the PokerStars offices on business related to the application in 2015.

Is PokerStars’ approval taking meaningfully longer than usual?

Yes – with two caveats.

If you do a quick analysis of TW’s related to online gambling (list of petitions / list of rulings), you’ll quickly see that TW applications related to online gambling are generally cleared within a few days or weeks.

Further, the very nature of the transactional waiver – a type of probationary approval – means that it’s generally awarded in a relatively tight time frame.

Finally, my understanding of the informal process in New Jersey is that companies do not file the TW application without a reasonable measure of certainty that a speedy approval is likely, as a protracted process can generate potentially damaging uncertainty.

The caveats:

There is no formal timeline for a TW, so there’s really nothing to say that it must – or should – resolve within a certain period of time.

As we’ll discuss below, PokerStars’ situation is somewhat unique, which undermines the usefulness of other TW applications as proxies for understanding PokerStars’ application.

Are there alternative reasons why it would take a uniquely long time?

Arguably. PokerStars’ situation is unique on a few levels when compared to its peers in New Jersey, including:

PokerStars decision to continue to operate in the United States following the passage of the UIGEA.

Any of the above could plausibly result in an application period stretching somewhat beyond what seems typical for New Jersey.

Isn’t Amaya already licensed in NJ? Why do they need another license?

Yes. Amaya has a number of other partnerships in the New Jersey market for regulated online gambling.

You can review a complete list of Amaya’s partnerships at the NJ DGE website. They include:

Caesars.

Golden Nugget.

Borgata.

Trump Plaza.

The easiest way to think of it is that Rational – now a subsidiary of Amaya – effectively requires separate approval from the DGE before the assets of that subsidiary can be deployed in New Jersey.

Here’s the full explanation provided to OPR by the DGE in June of 2014:

There is not a separate track between Amaya and PokerStars. The Division of Gaming Enforcement licensing process consists of both business suitability and technical product investigations. Amaya Gaming Group already has a transactional waiver issued by the Division in November of 2013.

Under the Act, the Division has the authority to issue transactional waivers to Internet gaming companies that have submitted a completed CSIE application and have been subject to preliminary investigation. The PokerStars acquisition becomes part of the ongoing Amaya licensing process and is reviewed for suitability by the Division like any other significant transaction by a CSIE or Casino Entity licensee.

Didn’t PokerStars already get rejected by New Jersey regulators?

Not exactly. Regulators suspended PokerStars’ application in December 2013.

At the time, the DGE said that it “may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated at which time the Division’s investigation of Pokerstars and its affiliated entities and associated individuals will be resumed to assess suitability.”

As for the motivation behind the suspension, the DGE cited “the unresolved federal indictment against Isai Scheinberg for the alleged violation of federal gambling statutes” and “the involvement of certain PokerStars executives with Internet gaming operations in the United State following the enactment of UIGEA.”

Amaya’s acquisition resulted in the removal of both Isai Scheinberg and Mark Scheinberg (Mark never faced any charges from American authorities) and was thought to also purge Rational of the other “certain executives” that proved problematic for the DGE.

What would PokerStars be offering in New Jersey?

While PokerStars was originally angling to own and operate a casino in Atlantic City, the current approach is for PokerStars to partner with Resorts AC (who hold an IGP) to offer some combination of online poker and casino games under the PokerStars and Full Tilt brands.

These games would be limited to players in New Jersey and would not be linked to PokerStars’ global player pool.

PokerStars may also power a Resorts-branded online poker site that stands alone or (more likely) feeds into a shared player pool with PokerStars NJ / Full Tilt NJ.

To the best of my knowledge, there’s been no official update on the initiative from either company since the initial announcement, and no word on the subject from new owner Amaya. The live poker room was referenced in the Business Insider article, but the article did not contain any updates on the status of the room or comments on the status of the room from Resorts or Amaya representatives.

How would PokerStars impact the New Jersey online gambling market?

Short version: The company will provide a shot in the arm to the online poker segment ofNew Jersey’s online gambling market. But that market is so small ($2.2m in revenue during January 2015) that even a massive jolt from PokerStars would still produce meager returns in the absolute sense.

It’s unlikely that PokerStars will dramatically impact the online casino segment in New Jersey, at least in the near-term.

A recent note from Morgan Stanley asserts that PokerStars will “accelerate growth” in New Jersey.

How would PokerStars impact the land-based gambling market?

Similar story to the above.

An investment in a state-of-the-art poker room at Resorts would generate jobs and stimulate some interest, but it would ultimately still be a poker room.

Within the larger context of Atlantic City’s gambling market – dominated by casino and entertainment spend – even a wildly successful poker room would struggle to register on the market’s broader financial picture.

Over time, PokerStars may be able to develop some marquee events that draw meaningful numbers to Atlantic City. But in the short-term, the impact is likely to be better for morale than for the town’s top line number.